Page 74 - GMT and GMT Bond Issuer Annual Report 2017 v2

NOTES TO THE
5. FINANCIALRISKMANAGEMENT(CONTINUED) 5.4 Liquidity risk (continued)
FINANCIAL
$ million
2017
Year 1 Year 2
11.2 11.2 (11.2) (11.2)
Year 3
11.2 (11.2)
Year 4
107.5 (107.5)
Year 5
5.0 (5.0)
Year 6 and later
101.2 (101.2)
Total cash flows
247.3 (247.3)
Carrying value
203.2 (203.2)
STATEMENTS
Financial assets – Advances to related parties Financial liabilities – Retail bonds
continued
For the year ended 31 March 2017
2016
Financial assets – Advances to related parties 11.2 11.2 11.2 11.2 107.5 106.2 258.5 203.2 Financial liabilities – Retail bonds (11.2) (11.2) (11.2) (11.2) (107.5) (106.2) (258.5) (203.2)
Total --------
5.5 Capital management risk
The Company’s policy is to match the value, term and maturity of external borrowings to the value, term and maturity of advances made to related parties. This minimises capital management risk for the Company.
Total --------
5.6 Fair value of nancial instruments
The fair value of nancial instruments has been estimated as follows:
$ million
Related party receivables Retail bonds
Fair value hierarchy
Level 2 Level 1
2017
211.6 (211.6)
2016
212.7 (212.7)
GMT BOND ISSUER LIMITED ANNUAL REPORT 2017 FINANCIAL STATEMENTS
For instruments where there is no active market, the Company may use internally developed models which are usually based on valuation methods and techniques generally recognised as standard within the industry. Some of the inputs to these models may not be market observable and are therefore estimated based on assumptions.
The Company classi es its fair value measurements using a fair value hierarchy that re ects the signi cance of the inputs used in making the measurements. The fair value hierarchy has the following levels:
— Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.
— Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
— Level 3: Inputs for the asset or liability that are not based on observable market data (i.e. unobservable inputs).
The fair value of nancial instruments classi ed as Level 2, being the related party receivables, is measured using the quoted prices of the retail bonds liability.
The level in the fair value hierarchy within which the fair value measurement is categorised is determined on the basis of the lowest input to the fair value measurement. If a fair value measurement uses observable inputs that require signi cant adjustment based on unobservable inputs, the measurement is a Level 3 measurement.
The Company’s policy is to recognise transfers into and transfers out of fair value hierarchy levels as of the date of the event or change in circumstances that caused the transfer.
72 NOTES TO THE FINANCIAL STATEMENTS